6:34 PM, February 25, 2014

On Tuesday, the board of the Michigan Strategic Fund approved funding for the planned development of 129 one and two-bedroom apartments inside the blighted former Strathmore Hotel on Alexandrine and 61 apartments inside the historic Milner Hotel near Comerica Park, which closed in October 2012. / Detroit Free Press

Detroit Free Press Staff Writers

Related Links

High demand for apartments and super-low vacancy rates in Detroit’s downtown and Midtown area are bringing still more apartment projects to the market.

The Michigan Strategic Fund approved incentives Tuesday for renovation projects to create apartments in two historic Detroit hotels — $3.5 million for the Strathmore in Midtown and $1 million for the Milner Hotel in the city’s central business district.

The Free Press reported in January that rents for apartments in downtown Detroit are spiking amid short supply, forcing out some young professionals who breathed fresh life into the city core.

On Tuesday, the strategic fund board approved funding for the planned development of 129 one- and two-bedroom apartments inside the blighted former Strathmore Hotel on Alexandrine near Cass Avenue and 61 apartments inside the historic Milner Hotel near Comerica Park, which closed in October 2012.

The Michigan Strategic Fund, which is overseen by a board of directors and staffed by the Michigan Economic Development Corp., seeks to promote economic development and create jobs through grants, loans and equity investments.

Of the units planned by Strathmore Apartments Limited Dividend Housing Association, 60% will be offered at market rate and 40% will be affordable housing, said Joe Martin, a program manager with the MEDC.

“Staff is excited about this project,” Martin said.

The Michigan Strategic Fund approved a $3.5-million equity investment in the project. Construction is expected to start in the spring on the $28.4-million project.

Ashley Owner is redeveloping the former Milner Hotel, where all 61 residential units will be priced at market rates, along with ground-floor and second-floor commercial developments, Martin said.

The MSF approved a $1-million grant for the $8.2-million project.

Buoyed by rising employment from Quicken Loans and its spin-off companies, General Motors, Blue Cross Blue Shield of Michigan, and Midtown anchors including Detroit Medical Center, Henry Ford Health System and Wayne State University, the rental apartment market downtown has been heating up in recent years.

Many apartment managers report waiting lists or occupancy rates at or above 95%. The popular Live Midtown and Live Downtown incentive programs offered by major employers to subsidize moves by their workforces to downtown have resulted in hundreds of new residents moving in.

The Milner opened in 1913 as the Henry Clay Hotel, named for Henry Clay Hodges — a wealthy Detroit manufacturer, author and real estate developer — not the legendary congressman from Kentucky.

The wedge-shaped hotel was designed by architects Alvin Harley and Norman Atcheson. An addition was tacked onto the building’s eastern half in 1915.

In 1950, the building’s name was changed to the Milner Hotel, when the Hodges estate sold the hotel to Milner Hotels Inc. It was the city’s oldest surviving hotel until it was announced in the fall of 2012 that the building would be closed and turned into about 50 high-end apartments.